Uncommon Wisdom

Alcatel-Lucent is asking shareholders to amend the rules for dismissing the CEO or chairman, which would make it easier for the company to shed current CEO Pat Russo. Russo’s position has been deteriorating with the company’s stock price and financial performance, and many inside ALU and outside believe that a major shakeup in management, needed to improve the company’s position, would have to start with Russo. We’ve noted for some time that Russo was less than the ideal candidate for the times, but one challenge that ALU would face should she be removed is whether anyone, at this time, could do much better. While Alcatel-Lucent has enormous strategic strengths and a strong customer position, it has also created a somewhat dysfunctional organization with the merger, and much of the strategic thinking that characterized the company in the past has been diluted by a combination of organizational change and tactical focus. We believe there are steps ALU could take to recover its position, and even to do so within a year, but they would be bold steps of the type that neither a sales-driven CEO like Russo nor a new figure in the role would be likely to take.

Comcast is buying social network and photo site Plaxo, and plans to integrate it into Comcast’s offerings, perhaps even creating a set-top box that could be used to “tune” to Plaxo sites and view pictures. The move is one of several recent steps taken by content and network firms to gain access to web properties for exploitation, and it seems to show that the whole sector is now looking for positive symbiosis among a variety of customer-reaching strategies, perhaps to stave off price competition. In Comcast’s case, we believe it is a step to attempt to hold profit and revenue in a market where satellite and RBOC competitors are generating significant pressure

HP is nearing an agreement to acquire EDS, which would make it the second-largest integrator in the world after IBM and a truly formidable challenger to IBM for perhaps the first time. The deal comes as the role of IT is shifting in the market in general, due to the emergence of the SOA-driven IT cycle, and also to a shifting relationship between IT and networking. While the deal highlights competition in the IT space, it also has implications for Cisco, whose software/service initiative is the company’s primary growth strategy. EDS has also had relationships with network vendors and a not-too-successful strategy to integrate networks and services it launched with Level 3.

A number of developments, especially a rumored suggestion of cooperation among 15 common carriers to produce a P2P-model IMS-competing, voice-over-IP architecture that would be open to developers, suggest that the telco space is shifting its view of the future to accommodate the death of voice as a profit engine and the need to develop connections with the web community to create richer applications. While the move is hopeful, it is also a major culture shift for the operators and perhaps most especially for the equipment vendors that support them. We’ll be looking at equipment vendor views on open software platforms and programs while at NxtComm this year, and we’ll report on the results.

ClearWire and Sprint have finally married, apparently, brokered by Comcast, Google and Intel. The move is said to be preparing to shake up wireless carriers, but the most significant impact will be to expand the notion of a hot spot into something with metro or even national scope. As we have said continually, WiMAX is portable user technology not mobile technology, and thus will have its greatest impact where 3G is used for laptop connect. We expect to see pricing for wireless laptop plans fall, but all wireless including WiMAX has a significant limit in total bandwidth per cell, and this will result in sub-par performance relative to wireline broadband connections.

Vendors and the Metro Ethernet Forum (MEF) are working to correct an Ethernet omission that may or may not have much relevance to customer interest or service success—the inter-provider NNI. Ethernet standards have not addressed this issue fully because there has been relatively little interest in using Ethernet for long-haul connections, but some believe that the BT interest in PBT for leased-line and frame relay replacement indicate that Ethernet could have a future at a national/international level. This may also spark more interest in pan-provider service management work being done by the IPsphere Forum.

We have added a cloud computing project dimension to ExperiaSphere, a CIMI Corporation open source software activity in the service logic and service management logic area. The enhancement will permit ExperiaSphere to be used to link to cloud computing applications, to support the development of those applications, and to use cloud computing as a platform for service and service management logic. See our ExperiaSphere wiki for details.

Network operators at a UK software event talked about more aggressive plans to focus on software-driven network services and features, and included goals of delivering software modules as elements or units of basic service functionality. This vision mirrors what we have heard in private dialogs and public presentations alike, beginning almost 18 months ago, but there are more public articulations of the view today than there have been in the past. Some operators are reportedly avid supporters of Web 2.0 (BT included) and others (like Telstra) are more skeptical. We believe that despite all of the talk here, there is actually relatively little real progress in transforming operator business models to a more software-driven, partner-developer-focused, form.

Cloud computing may be heading for a major role in the marketing plans of major vendors like Sun, HP, IBM, and Microsoft. Since the Internet is really an information network, it is really as much or more about storage and software as about network routers and other bit-moving gear, and IBM’s recent announcement of cloud computing support shows that the big IT players want to formalize their participation in and control of the server side. We believe that cloud computing activity will also push out into enterprise computing, and that it is a major part of IBM’s strategy to wrestle control of networking away from Cisco and its competitors.

We have launched an open source project to develop service logic execution environments (SLEEs) and service management execution environments (SMEEs) for NGN services. The initiative is called “ExperiaSphere,” and we are now actively seeking contributors and partners in the process. We’ve established a website wiki (www.experiasphere.wikispaces.com) for this new venture, and we invite our clients and those who read this blog to review the material there from time to time as the concept develops. Some coding is already started for this activity, and we expect to be making media announcements in May.